Central government funding for social and healthcare services

On 2 March 2017, the Government presented to Parliament a proposal (HE 15/2017 vp) for an Act on the Financing of the Counties to determine the amount of funding to be granted to counties to finance the provision of social and healthcare, environmental healthcare and rescue services. In spring 2017, the proposal is to be followed by a supplementary proposal for financing based on duties other than those listed above.

Of the funding to be granted to the counties for the purpose of providing social and healthcare, 7 per cent would be based on the size of the population and 92 per cent on the residents’ need for social and healthcare services as well as the conditions in which the services are provided.

Another objective is that the counties will, as of 2023, also receive central government funding for the purpose of promoting the health and wellbeing of the residents. It would represent one per cent of the total funding made available to counties.

Central government funding for counties to finance social and healthcare services:

The amount of funding allocated to counties would be determined by the

size of the population (7 %);

demographic structure of the population (39 %);

residents’ need for health, elderly care and social services (50 %);

population density (1,5 %);

insular geography (0,113 %);

promoting the health and wellbeing of the residents (1 %);

number of residents speaking a foreign language (1,4 %) or Swedish (0,30 %).

To determine the amount of funding required to meet the need for social and healthcare services, a number of criteria are proposed, such as the demographic structure of the country as well as the morbidity and socio-economic position of the residents.

Specific weighting factors would be determined for each illness based on prevalence and the cost of treatment.Variables indicative of the socio-economic position would include the number of people claiming social assistance, the number of unemployed, those living alone, those with minimum education as well as the number of unemployed and those not economically active. The proposal is based on the 2013 survey by the National Institute for Health and Welfare Social welfare and health care needs, and reform of the state subsidy system.

The allocation criteria for central government finding would be reviewed at least every four years. A government decree would be issued specifying the illnesses and socio-economic factors indicative of the need for and cost of healthcare, elderly care and social services and socio-economic factors as well as the weighting factors to be applied in the calculations and in the review of these factors at regular intervals.

The Act on the Financing of the Counties would specify a transition period for 2020–2024 during which a gradual transition would take place from cost-based financing to imputed state financing consistent with the new criteria.

Objective to curb the growth in social and healthcare costs

The goal of the health and social reform reform is to curb the growth in expenditure by approximately EUR 3 billion, or 1.5 percentage points per year during the period 2020–2030.

In the Ministry of Social Affairs and Health's baseline scenario, nominal social and healthcare services expenditure would grow by approximately 4.4 per cent per year between 2020 and 2030. To achieve the savings target, it would be necessary to keep the annual growth in social services and healthcare expenditure below three per cent during 2020–2030.

The target for curbing expenditure is extremely ambitious. Among other things, the increase in public social and healthcare cost can be controlled by

improving efficiency;

adopting the best practices;

reducing the need for services through timely provision of treatment and prevention of illnesses;

supporting the maintenance of health and functional ability;

increasing client charges;

limiting the range of services while ensuring access to necessary care.

Promoting wellbeing and health will also contribute to achieving this goal.

The central government funding for counties would be based on imputed costs and the actual costs of social and healthcare services incurred by the counties would not be taken into account in full in connection with the review of state funding.

According to the proposal currently before Parliament, central government funding would be reviewed annually and adjusted to the public financing resources available. This would be implemented by taking into account the general increase in costs multiplied by the county index plus 1 percentage point in 2021–2022 and 0.5 percentage point as of 2023. This would save about EUR 3 billion in annual funding by the end of 2030 as compared to the current social and healthcare cost trend.

The central government funding allocated to the counties would be reviewed annually against the actual costs and changes in the estimated costs. Actual revenues from client and user charges would also be taken into consideration.